Rule May Regulate Accounting
For Firms' Software Expenses

By

Elizabeth MacDonald Staff Reporter of The Wall Street Journal

Updated Dec. 19, 1996 12:01 a.m. ET

In a potential windfall for many companies, the American Institute of Certified Public Accountants proposed a new rule this week that finally would standardize how companies nationwide must account for their software expenses.

The proposed rule would require companies to amortize the costs of software they use internally, instead of immediately taking a hit against earnings, as some companies now do. Companies also would be able to amortize the costs of upgrading or enhancing computer programs. "The rule technically...